We make economics decisions every day: what to buy, whether to work or play, what to study. We respond to markets all the time: prices influence our decisions, markets signal where to put effort, they direct firms to produce certain goods over others. Economics is all around us.
This course is an introduction to the microeconomic theory of markets: why we have them, how they work, what they accomplish. We will start with the concept of scarcity and how specialization according to comparative advantage helps us achieve more than we could alone. Next we model a marked using the tools of Supply and Demand and learn what well working markets accomplish and what their limit are. We end by exploring the impact of government intervention on perfect markets. Examples are taken from everyday life, from goods and services that we all purchase and use. We will apply the theory to current events and policy debates through weekly exercises. These will empower you to be an educated, critical thinker who can understand, analyze and evaluate market outcomes.

YG

Nice lecture and quizzes. Easy to follow and very encouraging for those who is new to coursera or has failed to finish online courses within deadline before (like me).

MB

Apr 06, 2016

Filled StarFilled StarFilled StarFilled StarFilled Star

Excellent course to get an initial understanding of Micro economics. This course is really well structured and taught excellently by Rebecca and her team.

À partir de la leçon

When Government Intervenes

In week four we learnt that the markets maximize the surplus that can be generated. So what happens if the government steps in and intervenes in the market? This week we will analyze price floors and ceilings, taxes and subsidies and learn how the best intentions sometimes lead to very unfortunate results.

Enseigné par

Rebecca Stein

Senior Lecturer

Transcription

[MUSIC] Hello. In this unit we will explore government intervention and in particular we'll think about taxes and subsidies. We've already learned that in a market equilibrium where supply equals demand we maximized total surplus. And this implies that every time the government intervene it can only do harm, it can only have the potential of shrinking the surplus. And that's what we will cover in today's unit. But as we do so, I do want us to remember why government taxes and subsidies certain goods. In particular, governments often tax a good in order to raise revenues. They need the money in order to provide goods and services that we appreciate and want. So let's remember that. And the second thing that I want us to remember is that sometimes government taxes goods in order to deter behaviors that are not good. For example, they might tax soda drinks to discourage the drinking of sugary beverages, or they might tax cigarettes in order to deter smoking. And why do they subsidize goods? Usually to encourage certain behaviors. For example, the government might subsidize vaccinations in order to encourage people to go out there and get vaccinated. So once again let's go ahead and look at these government interventions. First taxes, then subsidies. And we'll look at the plus side and the negative sides of these interventions.